Capital Trust Ltd Directors Report.
Your Directors take pleasure in presenting the Thirty Third Annual Report on the business and operations of your company along
with the standalone and consolidated audited financial statements for the year ended March 31, 2019.
1. FINANCIAL RESULTS
The Companys financial performance for year ended 31st March, 2019 is summarized below:
|(Rs. In lakhs)|
|Total Income from operations||17562.44||17347.65||18150.35||18211.41|
|Profit Before Tax||117.83||1199.77||195.2||753.22|
|Profit/(Loss) after tax||84||622.86||241.15||137.22|
|Available for appropriation||84||622.86||241.15||137.22|
|Transfer to Reserve fund u/s 45IC of RBI Act, 1934||16.8||124.57||37.25||27.45|
2. FINANCIAL PERFORMANCE
The year was still under impact of the demonitisation of the high currency notes which was announced by the Government in November, 2016. Your company is providing the Micro enterprise loans which uses cash in the recovery operations. The installments on these loans have fortnightly / monthly collections of small denominations. On account of non-availability of cash post demonetization, the borrowers were not in a position to service their loans which led to delay and drop in collection rates.
There was also shortage of funds as the lenders as they were under wait and watch policy.
Despite of all these limitations the company has performed well as highlighted hereunder:
The standalone operating income has slightly increased from Rs.17347.65 Lakhs in year 2017-18 to Rs. 17562.44 Lakhs in year 2018-19
No. of branches increased from 237 to 251.
The standalone profits have decreased to Rs. 64 Lakhs from Rs. 622 Lakhs. However the consolidated profit of the company increased from Rs. 137 Lakhs to Rs. 241 Lakhs
Your company is now operating in 10 states. The company has always been following the path having a neat portfolio. Your company has strict checks and balances which enable the company to have a good clean portfolio.
Your company has never failed in paying any installments or interest to the lenders. The company enjoys good reputation with all its stakeholder. The credit rating of the company is BBB+.
3. FUND RAISING
During the year under review, there has not been any change in the capital. The total outstanding as on Rs. 48393 Lakhs from
the Banks and other financial institutions.
The company has also issued Non Convertible Debentures of amount Rs. 7500 lakhs to Bearing Equity Asia at the coupon rate of 16.5%. The total sanction amount is Rs. 10000 Lakhs. During the year the company has raised Rs. 14000 Lakhs (including NCDs) from banks and NBFCs. In addition the company has raised Rs. 9942 Lakhs through Direct assignment in Capital Trust and Capital Trust Microfinance.
The company has been paying dividend continuously for the last three years. However, due to demonetization and other market conditions, the profitability of the company has been impacted. But to keep the trend of paying the dividend, your board recommends the final dividend of 5% for the equity shares of the company.
5. RESERVE FUNDS
As per section 45 IC of RBI Act 1934, the Company has transferred Rs. 16.80 Lakhs in reserve fund i.e aggregating of 20% of its net profit.
6. CREDIT RATING
The Credit Rating of the Company is BBB+ from Care Ratings and BrickWorks. In the year 2018, the company also had the same rating.
The non convertible debentures issued by the company are alos rated as BBB+ by Care Ratings.
7. CONSOLIDATED FINANCIAL STATEMENT
In accordance with Section 129(3) of the Companies Act, 2013 and Accounting Standards (AS) - 21 on Consolidated Financial Statements, the audited consolidated financial statement have been prepared, which forms part of the Annual Report.
8. SUBSIDIARY COMPANIES
The Company has two wholly Owned Subsidiary in the name of Capital Trust Microfinance Private Limited and Capital Trust Housing finance Private Limited
The Audited Annual Financial Statements of Subsidiary Companies are tabled at the Audit Committee and Board and Board of Directors of the company. Copies of the Minutes of the Board Meetings of Subsidiary Companies are tabled at the subsequent Board Meetings held.
9. COMPLIANCE WITH RBI GUIDELINES:
Your Company is compliant with all the applicable RBI regulatory norms. Since the company has become systematically important Non deposit taking NBFC, the company complying with all the provisions of the master directions in this regard. The companys subsidiary company Capital Trust Microfinance Pvt. Limited has also become the systematically important Non deposit taking NBFC as a group company of Capital Trust Limited.
In addition to it the Capital Trust Microfinance Private Limited, which is a NBFC- MFI is fully compliant with the master directions for Microfinance Companies in India.
10. CAPITAL ADEQUACY
The Capital Adequacy Ratio of the company on consolidated basis was 36% as of March 31, 2019 as against the minimum capital adequacy requirements of 15% by RBI. The company is having adequate capital to sustain the future growth. On standalone basis the Capital Adequacy
Ratio of the company is 32%.
11. SHARE CAPITAL
There has not been any change in the authorised capital of the company. The paid up capital of the company remains at 16,36,14,150 divided to 1,63,61,415 equity shares of Rs 10/- each.
12. MATERIAL CHANGES AND COMMITMENTS AFFECTING
THE FINANCIAL POSITION OF THE COMPANY
There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.
13. CHANGES IN NATURE OF BUSINESS
There has not been any change in the nature of Business and the company continues to do the business as a Non-Banking Finance Company.
14. CORPORATE SOCIAL RESPONSIBILITY
As per the provisions of Section 135(1) of the Companies Act, 2013, the company has a Corporate Social Responsibility Committee comprising of the below members:
|Col. Vijay Kumar (Retd.)||Chairman||Independent Director|
|Mr. Sanjiv Syal||Member||Independent Director|
|Mr. Yogen Khosla||Member||Managing Director|
|Mrs. Anju Khosla||Member||Executive Director|
Your company is working with the people who are left by the Banks and large NBFCs as for them they are very small. The company provides financial assistance to these people to earn their livelihood and live their life with financial freedom. Your company is targeting missing middle. The company is also providing training to these poor people free of cost and providing them employment in the company. During the year, Capital Trust has implemented wide range of activities by providing training to people at Rural and semi urban areas in various fields in finance and credit sector free of cost for financial literacy and further facilitating employment opportunities to deserving candidates. So the Company feels that there is no additional CSR expenditure required.
15. RISK MANAGEMENT POLICY
The Company has a Risk Management Committee which has been entrusted with the responsibility to assist the Board in overseeing the Companys enterprise wide risk management framework and overseeing that all the risks that we are facing like strategic, financial, credit, market, market liquidity, interest rate risk, equity price, security, IT, Legal, Regulatory, reputational and other risks have been identified and assessed and there is adequate risk management infrastructure in place capable of addressing those risks. The Committee also has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The various measures to overcome principal risks and uncertainties are thoroughly studied and placed before the board and Audit Committee. The Companys management systems, organizational structures, processes, standards, code of conduct and behaviours together manage associated risks.
The Company has introduced several improvements to Integrated Enterprise Risk Management, Internal Controls Management and Assurance Frameworks and processes to drive a common integrated view of risks, optimal risk mitigation responses and efficient management of internal control and assurance activities.
The main objects of the Risk Management Policy adopted by the company are to ensure that all the current and future material risk exposures of the company are identified, assessed, quantified, appropriately mitigated, minimized and managed i.e to ensure adequate systems for risk management and assure business growth with financial stability.
16. CORPORATE GOVERNANCE
The Company is in compliance with the Corporate Governance requirement of Companies Act, 2013 also those set out by SEBI. The Company has also implemented several best corporate governance practices as prevalent globally. The report on Corporate Governance as stipulated under Listing Regulations forms an integral part of this Report. The company has also adopted various Social and Environmental policies and the same is placed on the website of the company www.capitaltrust.in.
A certificate from statutory auditors M/s Singhi & Co., Chartered Accountants, confirming compliance with the condition of Corporate Governance as stipulated under the listing Regulation also form part of the Annual Report.
17. CONTRACTS AND ARRANGEMENTS WITH RELATED
All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arms length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.
All Related Party Transactions are placed before the Audit Committee and also the Board for approval. Information on transaction with related parties pursuant to particulars of contracts or arrangements with related parties referred to in Section 188(1) in the prescribed form AOC -2 is appended as"Annexure - 1" to the Boards Report.
18. PARTICULARS OF LOANS, GUARANTEES OR
The provisions of Section 186(4) of the Companies Act, 2013 requiring disclosure in the financial statements of the full particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security is not applicable to us.
19. PUBLIC DEPOSITS
Being a Non Deposit taking Non-Banking Financial Company, your Company has not accepted any deposits from the public under section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 during the year under review.
20. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT - 9 as per provisions of Section 134(3) (a) Companies Act, 2013 and rules thereto is annexed to this report.
21. NO. OF MEETINGS OF THE BOARD
The Board met 5 times during the financial year 2018-19 viz., on May 22, 2018, July 20, 2018, August 11, 2018, November 14, 2018 and February 13, 2019.
The maximum interval between any two meetings did not exceed 120 days.The details of these meetings are given in Corporate Governance Report, which forms part of directors report.
22. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, Your Directors state that: in the preparation of the annual accounts for the year ended March 31, 2019, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;
ii. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2019 and of the profit of the Company for the year ended on that date;
iii. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. the Directors have prepared the annual accounts on a going concern basis;
v. the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
vi. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
23. DETAILS OF ADEQUACY OF INTERNAL FINANCIAL
CONTROLS WITH REFERENCE TO THE FINANCIAL
The Company has adequate internal controls and processes in place with respect to its operations, which provide reasonable assurance regarding the reliability of the preparation of financial statements and financial reporting as also functioning of other operations. These controls and processes are driven through various policies and procedures. During the year, such controls were tested and no reportable material weakness in the design or operations were observed.
24. DIRECTORS & KEY MANAGERIAL PERSONNEL
a) RETIRE BY ROTATION
During the year under review, Mrs. Anju Khosla (DIN-03496484), Director of the Company, retires by rotation. She being eligible offers herself for reappointment and was reappointed as Executive Director of the Company.
b) CESSATION/ RESIGNATION
During the year Mr. Hari Baskaran and Mr, Surendra Mahanti resigned from the board due to pre - occupancy and old age respectively. Their resignation was accepted by Board on 11th August, 2018. Mr. J.P Dua also resigned from the board as independent director with effect from 14th November, 2018. Col. Vijay Kumar (Retd.) will complete 5 years as independent director of the company on 30th September, 2019. It is proposed to appoint him independent director for a further period of 5 years. The resolution to this effect is placed before the members for their approval.
The company has appointed Mr. Nikhel Kochhar and Mr. Sanjiv Syal as the independent directors of the company with effect from 11th August, 2018
Brief profile of the new directors is given hereunder:
Mr. Nikhel Kocchar
Mr. Nikhel Kocchar is a Practicing Chartered Accountant and at present in CEO - India Internal Auditors Association. He is also Member of the Indian Public Schools Society (IPSS) and Member Selection Committee for appointment of Board Members. His areas of interest include Internal Controls & Audit, Risk Management, Corporate Governance, Organizational Systems & Processes and Corporate & Institutional Training.
Mr. Sanjiv Syal
Mr. Syal is a practicing Chartered Accountant with an experience spanning over 25 years in consulting and accountancy. Prior to setting up his accountancy practice in 2001, he set up and managed a leasing finance Company ABL Leasing for 9 years. He is also founder & NonExecutive Director in a software development company focussed on eLearning solutions Compro Technologies. He has been a catalyst in start up of many successful projects in the BPO, IT & Financial Services space. Some of the successful startups where he has played a role include Yatra online, RAC, Gulliver Travels, DMI Finance & Cisco Systems Capital.
Independent Directors have submitted the declaration of Independence, as required pursuant to Section 149(7) of the Act, stating that they meet the criteria of Independence as provided in section 149(6) of the Companies Act, 2013 and are not disqualified from continuing as Independent Directors.
25. BOARDS INDEPENDENCE
Based on the confirmation/disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of Section 149(6) of the Companies Act, 2013 and the requirements of Listing Regulations :-
1. Col. Vijay Kumar (Retd.) (DIN 06979864)
2. Mr. Nikhel Kochhar (DIN 01021382)
3. Mr. Sanjiv Syal (DIN 00271256)
26. POLICY FOR SELECTION AND APPOINTMENT OF
DIRECTORS AND REMUNERATION POLICY
The appointment of the directors of the as per the Policy framed from for Selection and Appointment of Directors. The policy is in compliance with the provisions of the Companies Act, 2013 and SEBI Listing (Obligations and Disclosure Requirements) Regulations.
The directors are appointed on the recommendation of the Nomination and Remuneration Committee.
27. NOMINATION AND REMUNERATION POLICY
The Company pursuant to the provisions of Section 178 of the Companies Act, 2013 has formulated and adopted a nomination and remuneration policy which is disclosed on our website.
28. ANNUAL EVALUATION OF BOARD MEMBERS
The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the non-executive directors and executive directors.
Pursuant to the provisions of the Companies Act 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 ("SEBI Listing Regulations"), the Board is required to carry out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the Audit Committee, Nomination and Remuneration Committee.
The executive Directors are evaluated on the basis of
|Organizational goals||Persistence||Continuous improvement||Decency|
|Humility||Integrity||Understanding of and commitment to company||Setting a vision for Companys Work|
|Managing execution||Building a strong organization||External communication and relationship- building||Enhanced Profit- ability|
The Independent Directors are evaluated on the basis of:
Structure of the Board - Competency, Experience and Qualifications of directors, Diversity in Board under various parameters, Appointment Process
Meetings of the Board - Regularity of meetings and adequacy, discussions and recording of dissent, if any.
Recording of minutes, dissemination of information
Functions of the Board - Role and responsibilities of the Board
Strategy and performance evaluation
Management of Conflict of interest
Stakeholder value and responsibility
Corporate culture and values
Facilitation of independent directors
Evaluation of performance of the management and feedback
Independence of the management from the Board
Access of the management to the Board and Board access to the management
The company has also formulated familiarisation of Independent Directors. The details of programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company www.capitaltrust.in.
Information on Directors Appointment /
A brief resume of the Director proposed for the appointment/re-appointment at the ensuing Annual General Meeting, the nature of his experience in specific functional areas and name of Companies in which he hold Directorship and Membership of committees of the Board are provided in the Notice of the Annual General Meeting of the company.
29. COMMITTEES OF THE BOARD
In accordance with the Companies Act, 2013 and Listing Regulations, the Company has following Committees in place:
Stakeholders Relationship Committee
Corporate Social Responsibility Committee
Nomination and Remuneration Committee
Risk Management Committee
Details of the said Committees along with their charters, composition and meetings held during the financial year, are provided in the"Report on Corporate Governance", as a part of this Annual Report.
30. EMPLOYEE STOCK OPTION SCHEME
Capital Employee Welfare Trust under Capital Trust Employee Stock Option Scheme, 2016 holds 143915 shares. The trust has not granted any shares to employees yet. There has not been any further allotment of shares to the Trust.
31. VIGIL MECHANISM
The company has adopted Vigil Mechanism policy with a view to provide a mechanism for directors and employees of the Company to report to the appropriate authorities concerns about unethical behaviour, actual or suspected, fraud or violation of the Companys code of conduct policy and provides safeguards against victimization of employees who avail the mechanism and also provide for direct access to the Chairman of the Audit Committee. The
31 provisions of this policy are in line with the provisions of the Section 177(9) and (10) of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015.The policy is available on the website of the company www.capitaltrust.in.
30. DISCLOSURE UNDER SEXUAL HARASSMENT OF
WOMEN AT WORKPLACE (PREVENTION, PROHIBITION
AND REDRESSAL) ACT 2013 READ WITH RULES
The Company is in compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and has a prevention of sexual harassment policy in place. The Directors further state that during the year under review, there was no case filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.The policy on Sexual Harassment of Women at Workplace is available on the website of the company www.capitaltrust.in.
31. AUDITORS AND AUDITORS REPORT
a) Statutory Auditors
The Statutory Auditors of the Company M/s Singhi & Co. Chartered Accountants (Firm Registration No. 302049E), were appointed as the statutory auditor of the from the conclusion of 31st Annual General Meeting held on 10th August, 2017 to hold office till the conclusion of Thirty Sixth Annual General Meeting in the year 2021-22 on such remunerations may be mutually agreed between the Board of Directors of the Company and the Auditors. However the appointment is subject to the ratification by the members in the ensuing Annual General Meeting. For that purpose the resolution is being placed before the members for their approval.
b) Secretarial Audit
Section 204 of the Companies Act, 2013 inter-alia requires every listed company to annex with its Boards report, a Secretarial Audit Report given by a Company Secretary in practice, in the prescribed form.
The Board has appointed M/s Shashank Sharma and Associates, firm of Practising Company Secretaries, to conduct Secretarial Audit for the financial year 2018-19. The Secretarial Audit Report for the financial year ended March 31, 2019 forms part of this Report. The Report does not contain any qualification, reservation or adverse remark.
c) Internal Auditor
The Company had appointed M/s D P Bhardwaj and Associates, Chartered Accountants as Internal Auditor. The Internal Auditor submits reports on quarterly basis which is placed before the audit committee of company.
32. EXPLANATIONS ON COMMENTS BY THE BOARD ON
ANY QUALIFICATION, RESERVATION OR ADVERSE
REMARK OR DISCLAIMER MADE
(i) Statutory Auditors report
There are no disqualifications, reservations, adverse remarks or disclaimers in the auditors report.
(ii) Secretarial Auditors Report
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark made by Secretarial Auditor.
(iii) Internal Auditors Report
The Internal Audit Reports does not contain any qualification, reservation or adverse remark made by Internal Auditor.
33. DETAILS OF FRAUDS REPORTED BY THE STATUTORY
During the year under review, the Statutory Auditors have mentioned that that no material fraud by the Company or any fraud on the Company by its officers or employees has been noticed or reported during the year except cash embezzlements made by employees aggregating Rs. 93.27 Lakhs out of which Rs. 32.23 Lakhs have been recovered. The Company has terminated the services of such employees and also initiated legal action against such employees. The balance amount has been provided for. The company has taken the fidelity insurance policy which covers the employee related frauds.
34. ANNUAL EVALUATION OF THE BOARD
A statement on formal evaluation of the Board is mentioned in the Corporate Governance Report which is provided separately in this Annual Report.
35. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION
AND PROTECTION FUND
There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as at 31stMarch, 2019.
36. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Conservation of Energy/ Technology Absorption
As the Company is not engaged in the manufacturing activity, the prescribed information regarding compliance of rules relating to conservation of Energy and Technology absorption pursuant to Section 134 (3) (m) of the Companies Act, 2013, read with Rule 8 (3) of the Companies (Accounts)Rules, 2014 is not provided.
Foreign Exchange Earnings and Outgo
The Foreign exchange earnings for the FY 2018-19 were Nil.
Foreign Exchange Inflow: Nil
Foreign Exchange Outflow: Nil
37. PARTICULARS OF EMPLOYEES
The statement showing the name of every employee of the company, who a. if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than One Crore Two lakh rupees :
|1 Name and Designation||Mr. Yogen Khosla, Managing Director|
|2 Remuneration received||Rs. 175.27 Lakhs|
|3 Nature of Employment||Permanent|
|4 Qualifications and Experience||Mr. Yogen Khosla is a commerce graduate from Loyola College, Chennai. He introduced the company into retail lending of Micro loans in rural and semi- urban areas in 2008. He has led the company to being adjudged as to one of the top 100 Small and Medium Enterprises in India by India SME Forum in 2017.|
|5 Date of Commencement of Employment||01-04-2003|
|7 Last Employment||Associated with the company since inception.|
|8 Percentage of Equity Shares held||41.88%|
b. if employed for a part of the financial year, was in receipt of remuneration for any part of that year, pro rata rate which, in the aggregate, was not less than Eight Lakhs Fifty thousand rupees per month; Nil
c. if employed throughout the financial year or part thereof, was in receipt of remuneration in that Year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company. Nil
38. GRIEVANCE REDRESSAL
Your Company has adopted a well-structured customer grievance redressal mechanism and provides customers a reliable and easily accessible interface for timely and fair resolution of enquires & complaints. The helpline Number is printed on each document shared with the customers and a person is dedicated to address the customer grievances. The helpline number is available in each branch with the contact person and the contact details of the Officials of the Reserve Bank of India for escalation of grievances if company is unable to redress the complaints. Grievance Redressal Mechanism is also available on the website of Capital Trust to facilitate easy access.
39. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATIONS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATION IN FUTURE
There have been no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and companys operations in future.
The Board of Directors acknowledge and place on record their appreciation for the guidance, co-operation and encouragement extended to the Company by the Government of India, Ministry of Corporate Affairs, Reserve Bank of India, Securities and Exchange Board of India, National Stock Exchange of India Limited,Bombay Stock Exchange Limited and other concerned Government departments/agencies at the Central and State level as well as various domestic financial institutions/banks, agencies etc.Your Directors also convey their gratitude to the shareholders, various various Banks/Multilateral agencies/financial Institutions/ credit rating agencies for the continued trust and for the confidence reposed by them in CTL.
The Company is also thankful to the Statutory Auditors and Secretarial Auditor for their constructive suggestions and co-operation.We would also like to place on record our appreciation for the untiring efforts and contributions made by the employees towards the growth of the Company.
FOR AND ON BEHALF OF THE BOARD
OF CAPITAL TRUST LIMITED
Chairman and Managing Director
Dated: 27th May, 2019
Place: New Delhi